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Private equity-backed Aeropostale could be valued at hefty premium in LBO

8 Oct 2013

dollar4_sqAeropostale’s private equity backer Sycamore Partners could reportedly make a buyout offer for the teen clothing retailer that would represent a hefty premium to its current market value.

Last month Sycamore bought an eight per cent interest in the company, which has seen its shares plunge 58 per cent over the past three years, making it the worst performing stock in the sector.

Investors expect Sycamore to make an offer for the rest of the business, which has room for plenty of further report, said Bloomberg.

A deal could value Aeropostale at $15 per share, which is a 57 per cent premium to yesterday’s closing price, said Avondale Partners.

The average sales multiple paid for apparel retailers in the region implies a bid of $16 per share, according to Bloomberg estimates.

The report quoted Royal Bank of Canada analyst Howard Tubin, who said that if Aeropostale can “turn things around, then there’s probably a lot of value as a public company or as an LBO candidate. The valuation depends on whether it can get back to historical levels of profitability.”

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